Customers Bancorp, Inc. Q3 FY2025 earnings call

• Deposits showed a growth of over $1.5 billion, with noninterest-bearing deposits surging by $900 million, making up about 31% of total deposits.
• Loans experienced a 6% quarter-over-quarter increase, with contributions from various verticals such as fund finance, commercial real estate, and venture banking.
• Net interest margin expanded by 19 basis points quarter-over-quarter, and net interest income rose by 14%.
• Successfully completed an oversubscribed 10x common stock offering, which significantly strengthened the capital levels.
• Recruited 4 deposit-focused teams in the quarter, bringing the total number of such teams to 7 with approximately 30 new team members.

Deposits grew by over $1.5 billion during the quarter, with noninterest-bearing deposits increasing by $900 million, accounting for about 31% of total deposits. Loans grew by approximately $900 million, a 6% quarter-over-quarter increase with diversified contributions across multiple verticals.

• The full-year deposit growth guidance was revised to 8%-10% from the previous 5%-9%.
• Loan growth guidance was increased to 13%-14% from the prior 8%-11%.
• Net interest income growth projection was adjusted to 13%-15% from 7%-10%.
• The efficiency ratio is expected to be below 50% for the year, and the common equity Tier 1 (CET1) ratio is projected to be around 13% at the end of 2025.

Risks include industry competition, interest rate fluctuations, and regulatory changes that could potentially impact the business operations.

Q: On the deposits, so if I were to look at -- obviously, you guys have been bringing in a lot of about $200 million to $350 million of lower cost deposits from the new banking team hires. If I were to look at 2026, should we expect the pace of deposit growth from the new banking team hires to continue around this pace? Or is that contemplating also the pace of new banking team hires is maintained in that like 4 teams higher per quarter range. Just want to get some color around the pace of deposit growth, how that could move versus what we saw in this quarter as we're reaching the saturation point from the big banking team hires that you guys made in 2024?

A: Sure. Well, Janet, thank you so much for that question. So to add a little bit of color, you rightfully sort of mentioned that we had sort of guided previously to about $300 million to $400 million or so of quarterly deposit growth from the new teams, which we, this quarter roughly achieved. Sometimes we're a little lower, sometimes we're a little higher, but we're kind of in that type of target. We would expect that pace to continue in 2026 based upon the '23 and '24 teams. The 25 teams are really going to start adding balances in the sort of end of the first half to the middle of next year and really ramp up. We expect over the course of the year, that should give us about a 25% lift on that $300 million to $400 million. So it kind of gives you a sense of sort of the layering of the vintages of teams that are being onboarded. One thing that I would mention that the $350 million of growth that we saw this quarter, it continued to maintain that sort of just at or under 30% noninterest-bearing deposits. Those deposits also came in at less than 2%, just under 2%, in fact. So I think that -- and that's prior to rate cuts. So just gives you a sense of the high-quality nature of those sort of we call them the singles and double type deposits that our teams are bringing in from the C&I and CRE side.